Dissenting Debenture-holders Should Be Provided with Options in Resolution Plan: SC

Moneylife Digital Team 15 March 2023

While disposing appeals challenging an order passed by the high court, the Supreme Court (SC) says dissenting debenture-holders should be provided options, either to accept the resolution plan (RP) or pursue other legal remedies to recover their entitled dues. The bench was hearing a case related to the RP of Autumn Investment and Infrastructure Ltd (AIIL) for Reliance Home Finance Ltd (RHFL). The apex court asked AIIL to make payments before 31 March 2023.

In an order issued earlier this month, the division bench of justice BR Gavai and justice Aravind Kumar, however, clarified that "...the dissenting debenture-holders should be provided an option to accept the terms of the RP. Alternatively, the dissenting debenture holders will have a right to stand outside the proposed RP framed under the lender's inter-creditor agreement (ICA) and pursue other legal remedies to recover their entitled dues."

The apex court observed that, similar the Securities and Exchange Board of India (SEBI) vs Rajkumar Nagpal, in the instant case as well, small investors, whose exposure is up to Rs5 lakh, are benefiting to the extent of 100% of their principal amount and that even debenture-holders, whose exposure is more than Rs5 lakh, are receiving 23.24% of their principal amount.

RHFL had filed an interim application seeking approval of its RP on the same terms as ordered by the apex court in Reliance Commercial Finance Ltd (RCFL) in the SEBI vs Rajkumar Nagpal case. It submitted that the two cases are nearly identical and any unscrambling of the RHFL's resolution plan would prove time-consuming and inimical to the interests of the debenture-holders.

The HC had dismissed the application, holding that the power to mould relief and approve the RP, as had been done by the SC under Article 142 of the Constitution of India, could not be done by the HC in the exercise of its inherent powers under Section 151 of the Civil Procedure Code (CPC).

Drawing a comparison between both the cases, the division bench observed, "In the present case also, we find that a different voting mechanism proposed under the SEBI circular will further delay the resolution process and potentially disrupt the efforts undertaken by the stakeholders, including the retail debenture holders.

"In the present case also, such unscrambling of the resolution process will not only prove time-consuming but may also adversely affect the agreed realized gains to the retail debenture holders, who have already consented to the negotiated settlement before the HC. We find that in the present case also, we should extend the benefit under Article 142 of the Constitution of India to the retail debenture holders," it added.

(Civil Appeal Arising out of SLP(C) Nos411/1078 of 2023 Date: 3 March 2023)

Comments

User

r_ashok41

5 days ago

we are sr citizens and have not got any money from RHFL inspite of SC decision.
What is happening .Why is mr Anil ambani not in custody for having siphoned the money.He is living a royal life and he should be penalised for whatever has happened to the investors.

ravi.sonunis

5 days ago

Dear sir/madam, we have investment of rupees fifty thousand in NCD of RHFL in year 2017, as per Supreme court order ,we have given our approval to the resolution plan to get the Our investment back, send email to RHFL, IDBI TRUSTEE in last week,we are not getting any response and reply from them. Please help us to get the amount from them. We are senior citizens. Please do the needful. Regards,

atulleo18

Replied to ravi.sonunis comment 2 days ago

Dear sir,
You will get your principal amount of fifty thousand at the earliest as per resolution plan approved.

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